Sensex closes off day's highs on weekly expiry, Nifty below 23,750; traders await cues from Q3 results

ONGC, SBI Life Insurance, Tata Motors, HDFC Life Insurance, and Reliance Industries were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex rebounded on January 7, trading firmly in the green, albeit off lows in the afternoon, driven by gains in metal, energy, and oil and gas stocks. However, IT stocks faced selling pressure ahead of TCS's Q3 earnings announcement on Thursday. This revival follows the steep losses on January 6, when the benchmark indices tumbled 1.5 percent amid investor concerns over the Human Metapneumovirus (HMPV).

At close, the Sensex was up 234.12 points or 0.30 percent at 78,199.11, and the Nifty was up 91.85 points or 0.39 percent at 23,707.90. About 2,527 shares advanced, 1,286 shares declined, and 103 shares unchanged.

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"Persistent foreign institutional investor (FII) selling since September remains a significant headwind, and the bias hasn’t shifted yet. A sustained rebound will require a reversal in FII flows, which currently appear unlikely due to the rising dollar index and attractive US Treasury yields offering risk-free returns," Raj Deepak Singh of ICICI Securities said in a conversation with Moneycontrol. "The expert predicts the dollar index might not breach 110, but even current levels are unfavourable for Indian equities. A decline in the index would signal better prospects for the domestic market" he added.

As for Q3, there is limited upside potential, with no substantial triggers expected from earnings. Without robust FII inflows, the market could remain range-bound. Bottom-fishing opportunities also seem unappealing at this stage. Broader markets, which outperformed in recent years, are showing relative weakness, though domestic flows remain steady.

Also read: Berger Paints actively looking to buy Akzo Nobel's India stake, says CNBC-TV18; Dulux maker's shares rise 7%

The broader market, encapsulating the mid and small cap indices, mirrored positive trends to outperform the frontline indices following a sharp fall of about 3 percent in the last two trading sessions. The two rose 0.9 and 1.35 percent, respectively. In 2024, Nifty Smallcap 100 and Nifty Midcap 100 indices surged over 20 percent each to outpace Nifty's 9 percent gain.

In the afternoon, the Nifty Metal closed as one of the top sectoral gainer, edging higher by 1.3 percent. Sharp gains in Vedanta, Hindalco, and JSW Steel helped the index higher. Nifty Energy was also among the top gainers, rising over 1 percent after ONGC, Oil India and Coal India rallied. Nifty Pharma and PSU Bank index also rose but pared slight gains to close to 0.6 and 0.5 higher, respectively.. On the other hand, the IT sector slipped 0.7 percent led by TCS, HCL Tech, Infosys, and Tech Mahindra. TCS, India's largest IT services provider, will be in focus this week as it is set to kick off the earnings season on January 9.

Also read: Airtel revenue to surge 24% in Q3, marginal rise on cards for Vodafone Idea: Analysts

Among gainers, Akzo Nobel shares were the brightest spark with gains of over 7 percent. This comes after CNBC TV-18 reported that Berger Paints is actively looking to buy Akzo Nobel's India stake as the latter's promoters look to exit the Indian market with the sale of their 74.6 percent stake. JSW and Indigo Paints are also in the fray to acquire a stake in the Dulux maker, the channel reported. The contours of the deal are to be decided whether full cash or hybrid, added CNBC-TV18 while pegging the deal value at Rs 10,000-12,000 crore.

Shares of ITI were locked in the 10 percent lower circuit on January 7, snapping a two day winning streak. Prior to today's fall, the stock was locked in the 20 percent upper circuit for two consecutive sessions, giving investors plenty of leeways to cash out partial profits. The sharp moves in the stock were also triggered by an influx of heavy trading volumes. As many as two crore shares already changed hands on the exchanges in comparison to the one-month daily traded average of three crore shares.

Shares of Caplin Point Laboratories surged 3.5 percent on January 7 after the US Food and Drug Administration cleared the drugmaker's injectable and ophthalmic manufacturing facility in Gummidipoondi, Tamil Nadu with zero observations. The US drug regulator conducted an unannounced inspection of the facility between August 5-9.

"The uncertainty surrounding the virus adds another layer of risk, necessitating close monitoring. Until there is clarity or relief on these fronts, investors should avoid attempting to "catch a falling knife," as the sell-off may persist," Sameet Chavan, Head of Technical and Derivative Research at Angel One, said.

"On the upside, any interim bounce is unlikely to be sustained, with the 200 DSMA around 23900–24000 expected to act as immediate resistance. A decisive breakout above 24200 is essential to signal a resumption of the uptrend. Additionally, midcap and small-cap stocks were the hardest hit and continue to appear vulnerable. Traders are advised to exercise caution and maintain a light exposure to these segments for the time," he added.

ONGC, SBI Life Insurance, Tata Motors, HDFC Life Insurance, and Reliance Industries were the top gainers on the Nifty. HCL Tech, TCS, Eicher Motors, Tech Mahindra, Trent and Hero MotoCorp were the major laggards.

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